CHAPTER 18 presentation

2 profitability ability to earn income and sustain

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2. Profitability- ability to earn income and sustain growth in both the short- and long-term 3. Solvency- ability of a business to have enough assets to cover its liabilities. Solvency is often confused with liquidity, but it is not the same thing. Analyzing Financial Statements
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The item-by-item comparison of two or more  comparable alternatives, processes, products,  qualifications, sets of data, systems. Used to compare the amount of cash a company  has with other financial statement data. Comparative Analysis
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Types of comparisons to provide decision usefulness of financial information: 1. Intracompany basis- compares an item or  financial relationship with other data within a  company. 2. Industry averages- compares company data  with industry averages. 3. Intercompany basis- compares an item or  financial relationship of a company with data of  one or more competing companies. comparisons
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http://www.wikiwealth.com/comparative-multiple-analys Business Example
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Bob, J. (2012, September 23). Basic Financial Statement Analysis. Retrieved from http://www.ehow.com/facts_5871584_basic-financial-statement-analysis.html David, H. (2007, November 26). Intercompany vs intracompany. Retrieved from http://davidhaimes.wordpress.com/2007/11/26/intercompany-vs-intracompany/ www.wisegeek.com/what-are-intercompany-transactions.htm Harvey, L. (2003, May 23). Steps to a Basic Company Financial Analysis. Retrieved from http://faculty.philau.edu/lermackh/financial_analysis.htm Harmonic, B. (2011, November 17). Overview of Financial Statement Analysis. Retrieved from http://www.youtube.com/watch?v=4ayqk6g3lGU Jerry, W., Paul, K. & Donald, K. (2012). Accounting Principles. Retrieved from Accounting Principles Textbook Sources
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2 Profitability ability to earn income and sustain growth...

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